How Asian Companies can Better Manage their Design and Branding
A design and branding case study on 2 of the more prominent Singaporean consumer brands Creative and OSIM. We track their success, as well as comment on what they can do to overcome their current struggles in this very fast pace and fickle consumer market.
Success is not always sweet
Success lies in the sum of its parts. Two Singapore’s brightest “sons”, Creative and Osim, have been successful in their time as the first local Singapore brands that succeeded in stamping their marks globally as leaders in computer sound technology (Creative) and health and wellness (Osim) markets.
However recently there has been a spade of articles on the fading success of the former darlings of the Singapore Stock Exchange, as well as challenges ahead for Creative and Osim.
Really these two brands are finding out that maintaining a successful consumer products business is a whole different ball game. With the media slamming their recent poor performance as well as their products, the harsh reality of the success of their competition is starting to set in.
Facing the Storm in Different Ways
The lawsuit between Apple and Creative, over Apple’s usage of Creative’s patented technology last year, brought about a settlement payout of $100-million in favor to Creative and a collaboration agreement for designing Apple accessories. Although the payout helped overshadow poor performance, other reports have argued this collaboration may not generate much positive fallout unless a strong innovative product arises from the venture. Furthermore in light of their recent poor performance, Creative has indicated that they are taking the most common route of a failing business and that is restructuring their resources and cutting down costs, in order to break even.
Actually it’s really about “Survival of the Smartest” in this market in particular.
As for Osim it is currently facing the consequences of, what many say was a poor acquisition, the buy out of American health retail chain Brookstone, and nutrition retailers GNC. Also the recalling of 3000 “Uzap mini belts” which caught fire, resulted in a loss of product sales and customer good will. Moreover together with claims of Osim’s designs getting pirated by other competitors, these factors have contributed to company’s share price hitting an 18 month low in Feb 2007. Despite the deterioration of sales and branding goodwill, Mr Ron Sim is still optimistic and aims grow sales targets by breaking into new markets currently not covered by OSIM.
However if we take a step back, focus on the big picture, and consider what Osim and Creative plans to do, the question that many ask is, “is this enough” Or perhaps in our point of view “is this the right thing to do”? Cutting cost or taking a gamble by looking for new markets is perhaps only a short term solution at best. This is especially when, in our opinion, the problem might lie with their product delivery. Let us explain.
The Importance of Design in Product Branding
“Design is the silent ambassador of a brand” ~Paul Rand.
Nothing shouts more about your brand than your product sitting in front of your consumer. In order for a brand to be successful, a total holistic application of the company’s brand values and vision needs to be adopted in a 360 degree manner within the organization.
Naturally this should cover all aspects of the product that company sells, from marketing collaterals, to packaging, to customer service and most importantly the product’s design and function. However it is surprising how many companies actually don’t do this. We think this fact, as well as the failure to adopt a holistic branding directive is one of the key causes of the problems faced by Creative and OSIM today.
1) Adopting Design’s role as a strategic function in the organization or business .
You can call it a strategic function, or a strategic competitive advantage, or you can call it what you like, but in reality it’s a lot easier said than done.
For one thing in most successful design focused companies, a designer is found in a senior management level with major decision making responsibilities, or at level that he/she reports directly to the CEO. This basically means there is a person in a position, with multi-disciplinary design capabilities, and power to make decisions that steer the company in the correct direction. However with most companies, especially in Asia, design is seen as just a styling exercise and a function of engineering or marketing.
Another thing with adopting design as a strategic function, implies a certain level of well manage risk taking as well as change management. Something a lot of Asian companies are not comfortable doing as they prefer dealing in absolutes such as Returns of Investments (ROI) and a very cost centered approach to product development.
OSIM’s marketing ads.
Thus the preferred approach towards product development is via the route of the outsourced OEM/ODM method where the development cost or risk has been absorbed by someone else. The disadvantages to this approached is, as alluded to earlier, is a range of products with little distinction and innovation, and making it easy of getting the products copied by the nearest competitor.
On an interesting note Creative’s engineering heritage as reflected in its brand and the reason of its success in the past could be another reason why it is struggling in the Personal Digital Entertainment (PDE) market. Interestingly Creative’s engineering “form follows function” approach to product development does conflict with the lifestyle PDE market where people do not put as much of a value on specification as much as they do on usability and experience.
This means Creative needs to reposition its brand and align it with the target market they are after, resulting in a massive re-branding exercise. Whether right or wrong, a person with a design background in a position of management could recommend to Creative’s top managers a strategy that could covers all aspects and requirements of a business as well as get them out of this current rut.
2) The Product is not representative of the brand values or brand promise of that company
Interesting choice of font for the tag line, almost too casual for the “structured” Creative logo, clean ad layout and refined product design.
For example when a product performs badly or does not do as what the consumer expects it to do; invariably the blame goes to the company that sold you the product. Furthermore if your brand stands for something like say being “creative” and your product is perceived as far from that, you damage your brand’s good will.
What other than the vertical scroll bar is “Creative” about this product?
3) A lack of a distinct brand language or identifier product
Traditional business practices have a tendency to carry as many product permutations as possible in the bid to sell as much as possible to every possible market. This results in often an extreme varied and diversified range of products in inventory.
Nice looking products, but confusing.
Without an overall cohesive product strategy, it can get confusing for the consumer to identify which product belongs to you. A distinct brand language not only represents your brand values, but allows your product to have an instant recognition and brand recall that is very powerful in decision making when a consumer is engaged in a buying process.
Case in point, according to brand strategists the success of the top well-known brands, like Coca-Cola, Apple and Intel, are due to their strong brand concentration on a small product category such as computer chips and carbonated water. That’s how they have succeeded so far.
Again a nice looking fashion inspired product, but (other than the color) I have trouble relating it to the MP3 player, grungy graphics and the ugly earphone jacks.
If we look back at our case studies, we can see that Creative’s strategic thrust is towards a global leader for product innovation in the audio and PDE segments, and Osim’s company philosophy is all about intelligent innovation. Sadly both company’s products are at this time are not truly reflective of the values of both the company’s philosophy. Furthermore they struggle with a situation where they have too many products to have a strong and cohesive product delivery or design language.
4) Locating design as a function of R&D or Marketing.
We touched briefly on this in point 1. If we look at it from an overall big picture view, if design is a function of any department other than management, it will become a victim of agendas.
For example if design reports to engineering, many costs that fall outside normal acceptable engineering requirements may be discarded. If let’s say a designer came up with a cool new way of placing a button on a circuit board, or specified a volume dial that looked a lot better and thus more expensive, that designer would likely get turned down by the engineering department.
It’s not any better if Design reported to marketing. What would likely happen is product lead times would be shortened, specifications become a shopping list, and there will be a new product launched every quarter. This further encourages the OEM/ODM outsourced mentality that we already know kills innovation.
So what of the future of our 2 home grown brands, Osim and Creative?
With the recent launch of IT show in Singapore, it was interesting to see how Creative’s and Osim’s booths were designed. It was interesting and obvious that Creative has diverted greater attention towards the design of sound accessories like head phones and speakers rather than focusing on mp3 players. As for Osim, their creative marketing has produced yet again with the idea of providing rest and relaxation for the tired visitors at the IT show, and has once again created another unique brand awareness campaign. But is it enough to sell their product’s health and wellness capabilities? Only time will tell.
We wish both companies all the best in 2007 and would be more than happy to discuss possible strategies with anyone for both.
This Article is the first that was written as a joint effort between DT and PY. I hope you enjoyed the fruits of this collaboration, and do stay tuned for more riveting and unbiased look at the design industry today.